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Obama-backed energy firm goes bankrupt, even with stimulus
Two GOP senators question loan by U.S.
Question of the Day
When Energy Secretary Stephen Chu announced a half-billion dollars in federal stimulus loans to solar panel maker Solyndra, he called the move part of an aggressive effort to put more Americans to work and end U.S. dependence on foreign oil.
But nearly two years to the day later, the bankrupt Solyndra needs help just to keep it own electricity service from being shut off.
As part of a bankruptcy petition filed Tuesday in Delaware, the Fremont, Calif.-based company sought a court order to bar phone, electricity and water and sewer service providers from "altering, refusing or discontinuing service."
The request provides another example of just how fast and hard the company has crashed, despite hundreds of millions of dollars in loans and praise from top levels of government, including the White House.
Little more than a year ago, President Obama hailed Solyndra during a tour of the company, saying the company expected to hire 1,000 workers and make enough panels over the lifetime of its planned expanded facility that it would be like replacing eight coal-fired power plants.
"It's here that companies like Solyndra are leading the way toward a brighter and more prosperous future," Mr. Obama said.
The company's bankruptcy petition came two years after Mr. Chu and Vice President Joseph F. Biden announced approval of $535 million in federal loans to Solyndra.
"This announcement today is part of the unprecedented investment this administration is making in renewable energy and exactly what the Recovery Act is all about," Mr. Biden said.
Instead, Solyndra, which was launched in 2005, last week shed more than 900 full-time employees, leaving just a "core group" of 113 employees, according to bankruptcy records filed Tuesday.
W.G. Stover Jr., chief financial officer for Solyndra, said in a court filing that the company was battered by "the combination of general business conditions and an oversupply of solar panels" that reduced prices worldwide.
He blamed the oversupply on expanding capacity by foreign solar panel manufacturers that "utilized low cost capital provided by their governments to expand operations."
"In response, Solyndra was forced to reduce its average selling prices to remain competitive," Mr. Stover explained in the 56-page court filing.
In addition, he said the reduction or elimination of government subsidies and incentives to buy solar energy, particularly in Europe, also hurt demand for the company's panels.
Finally, Mr. Stover said some customers began refusing to honor their payment terms as foreign competitors offered extended payment terms.
In the wake of Solyndra's mass layoffs last week, administration officials have defended the move to provide loans to the company.
Dan Leistikow, director of public affairs for the Energy Department, said in a statement that "changing economics have affected a number of solar manufacturers in recent months, including unfortunately, Solyndra. ..."
"This loan guarantee was pursued by both the Bush and Obama administrations," Mr. Leistikow said. "Private sector investors, who put more than $1 billion of their own money on the line, also saw great potential in the company."
Reacting to news of the company's layoffs last week, Jay Carney, White House press secretary, said there were more than 40 companies in the same loan program that funded Solyndra and "you cannot measure the success based on one company or the other."
But Republicans in Congress are investigating the Solyndra collapse. Rep. Cliff Stearns, Florida Republican and chairman of the subcommittee for oversight and investigations on the House Energy and Commerce Committee, said last week the company's collapse should raise concerns about the entire stimulus program.
"The administration celebrated Solyndra as the first recipient of its loan guarantee program and intended to showcase its success as representative of its stimulus program," Mr. Stearns said. "This should be of great concern to all American considering the $1 trillion committed by the White House to its stimulus efforts."
Mr. Stearns and Rep. Fred Upton, Michigan Republican and chairman of the House Energy and Commerce Committee, sent a letter last week to the White House seeking information about the White House's role in the loans to Solyndra.
In the letter, Mr. Stearns and Mr. Upton said they've learned from an investigation they had previously been conducting that Department of Energy officials, as well as officials from the Office of Management and Budget, were aware of White House interest in the Solyndra loan deal. In addition, they said they were aware that a major investor in Solyndra, George Kaiser, was a bundler for Mr. Obama's campaign.
"Now with the collapse of Solyndra, we see 1,100 employees out of work and taxpayers out of $535 million, most likely," Mr. Stearns said in a statement.
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
About the Author
Jim McElhatton is an investigative reporter for The Washington Times. He can be reached at firstname.lastname@example.org.
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